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Forex Flash: We remain sellers of EUR/USD on rallies for now - Rabobank

FXstreet.com (San Francisco) - With almost 1000 pips lost in two months from the February 1st high at 1.3710 to the last week low at 1.2755, the EUR/USD recovered on Monday and early Tuesday session to test 1.2880 region, but after being rejected by this level, the pair is currently trading at 1.2815. Has the Euro bottoming at 1.2755? Rabobank says no.

"The impact of the Cypriot crisis on the FX market was not violent but EUR/USD was trading distinctly lower in the days after the bail-out then in the hours that led up to the deal being signed," points the Rabobank analysts team. Following Cyprus developments, "the concept of banking sector bail-in as an alternative to tax payer support in the event of a banking collapse is now settling into the awareness of Europeans."

In this line, "if bank depositors do respond to credit ratings, many weaker banks in the Eurozone region could find themselves subject to another bout of capital flight." That's mean lots of euro sellers. "In effect, through the
Cypriot crisis, investors has been dealt a strong reminder that the Eurozone crisis is alive and kicking."

And as occurred in the past, Eurozone crisis will pressure the EUR/USD to the down. "We remain sellers of EUR/USD on rallies for now," concluded Rabobank.

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